CB&I Announces Third Quarter 2017 Results

THE WOODLANDS, Texas, Oct. 30, 2017 /PRNewswire/ -- CB&I CBI today announced financial results for the third quarter of 2017.

CB&I reported net income of $10 million, or $0.10 per diluted share, in the third quarter of 2017, compared to net income of $121.8 million, or $1.20 per diluted share, in the third quarter of 2016.

Net income for the third quarter of 2017 was impacted by restructuring charges of $27 million, or $0.17 per share, related to the company's cost reduction program, and excess interest expense of $22 million, or $0.14 per share, due to accelerated amortization of debt issuance costs.

Continuing operations consist of CB&I's Engineering & Construction (E&C) and Fabrication Services businesses. The results of the company's Technology and former Engineered Products and Capital Services operations have been classified as discontinued operations for all periods presented.

"We have made significant progress on the decisive actions we announced last quarter, including our cost reduction program, the continued improvement of our project execution and risk management processes, and the intended sale of our Technology operations," said Patrick K. Mullen, President and Chief Executive Officer of CB&I. "Our cost reduction program is on track, with a positive impact on our financial performance already apparent. We are also extremely pleased with the sale process for our Technology operations and the interest from bidders on developing a long-term strategic alliance with CB&I.

"Our results this quarter were impacted by unusual items totaling $49 million, or $0.31 per share. We experienced continued cost pressure during the quarter, primarily on the IPL and Calpine power projects, with execution on our other projects continuing as planned. New awards were lower than expected, primarily within E&C, due to the delay of certain key projects. However, we have a significant pipeline and anticipate a strong fourth quarter and first half of 2018 for new awards."

Continuing Operations
Revenue for the third quarter of 2017 was $1.7 billion, compared to revenue of $2.1 billion in the third quarter of 2016.

New awards in the third quarter of 2017 totaled $437 million, compared to $1.7 billion in the third quarter of last year. Backlog at September 30, 2017, was $10.7 billion, compared to backlog of $13.2 billion at September 30, 2016.

Engineering & Construction Operating Group
E&C operating group revenue was $1.3 billion in the third quarter of 2017, compared to $1.7 billion in the year-ago quarter. The E&C group reported operating income of $13.1 million, compared to $126.8 million in the third quarter of 2016. Results were impacted by changes in estimated margins on two U.S. gas turbine power projects of $38 million and additional costs on U.S. LNG projects of approximately $16 million due in part to the direct effects of Hurricane Harvey. The E&C group's new awards in the third quarter totaled $65.2 million, compared with $1.5 billion in the third quarter of 2016, and backlog as of September 30, 2017, was $9.2 billion.

Fabrication Services Operating Group
Fabrication Services operating group revenue was $389.7 million compared to $467.0 million in the year-ago quarter. The Fabrication Services group reported operating income of $26.1 million compared to $27.8 million in the third quarter of 2016. The Fabrication Services group's new awards in the third quarter were $371.8 million, compared with $215.3 million in the third quarter of 2016. Backlog as of September 30, 2017, was $1.5 billion.

Discontinued Operations
The Technology operations revenue was $170.1 million, compared to $183.3 million in the year-ago quarter. Technology operations reported operating income of $61.2 million compared to $55.9 million in the third quarter of 2016.

Guidance
The company currently expects revenue for the fourth quarter of 2017 to be between $1.8 and $2.0 billion and diluted earnings per share in the range of $0.50 to $0.60. The company's updated guidance for the fourth quarter of 2017 includes continuing and discontinued operations but excludes the continuation of incremental interest expense and any additional restructuring charge that may be required. Guidance also excludes any significant benefits from the cost reduction program, which are expected to be fully realized in 2018.  

Earnings Conference Call
CB&I will host a conference call and webcast October 30, 2017, at 4:00 p.m. CDT (5:00 p.m. EDT) to discuss financial and operating results and answer questions from investors. The webcast will be available on the Investor Relations page of www.CBI.com, and the conference call can be accessed by telephone at 1-800-301-8321 (U.S.) or 1-706-634-2259 (outside the U.S.) with conference ID # 6097289.

About CB&I
CB&I CBI is a leading provider of technology and infrastructure for the energy industry. With more than 125 years of experience, CB&I provides reliable solutions to our customers around the world while maintaining a relentless focus on safety and an uncompromising standard of quality. For more information, visit www.CBI.com.

Important Information For Investors And Shareholders

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements regarding CB&I and represents our expectations and beliefs concerning future events. These forward-looking statements are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties. The forward looking statements in this press release include: statements about CB&I's new awards and backlog, to the extent these may be indicators of future revenue or profitability; the intended sale of the Technology operating group, including the timing with respect to the completion of that sale; the execution of activities on and completion of specific projects, including timing to complete, future productivity and cost to complete; estimates of percentage of completion and contract profits or losses.

When considering these and any other statements that are predictive in nature, depend upon or refer to future events or conditions, or use or contain words, terms, phrases or expressions such as "achieve," "forecast," "plan," "propose," "strategy," "envision," "hope," "will," "continue," "potential," "expect," "believe," "anticipate," "project," "estimate," "predict," "intend," "should," "could," "may," "might" or similar forward-looking statements, we refer you to the cautionary statements concerning risk factors and "Forward-Looking Statements" described under "Risk Factors" in Item 1A of our Annual Report filed on Form 10-K filed with the SEC for the year ended December 31, 2016, and any updates to those risk factors or "Forward-Looking Statements" included in our subsequent Quarterly Reports on Form 10-Q filed with the SEC, which cautionary statements are incorporated herein by reference.

Investors: Scott Lamb, +1 832 513 1068, Scott.Lamb@CBI.com 
Media: Gentry Brann, +1 832 513 1031, Gentry.Brann@CBI.com

 

Chicago Bridge & Iron Company N.V.

Consolidated Statements of Operations

(in thousands, except per share data)










Three Months


Nine Months



Ended September 30,


Ended September 30,



2017


2016


2017


2016










Revenue


$

1,737,764



$

2,137,877



$

4,668,690



$

6,200,713


Cost of revenue


1,655,002



1,920,894



4,919,206



5,591,393


Gross profit (loss)


82,762



216,983



(250,516)



609,320


% of Revenue


4.8

%


10.1

%


(5.4)

%


9.8

%










Selling and administrative expense


51,458



62,913



173,594



190,207


% of Revenue


3.0

%


2.9

%


3.7

%


3.1

%










Intangibles amortization


1,891



1,937



5,771



6,451


Equity earnings


(9,727)



(2,632)



(21,210)



(1,875)


Restructuring related costs


26,882





30,882




Other operating (income) expense, net


(53)



189



(415)



1,112


Operating income (loss) from continuing operations


12,311



154,576



(439,138)



413,425


% of Revenue


0.7

%


7.2

%


(9.4)

%


6.7

%










Interest expense


(5,288)



(1,586)



(9,036)



(4,666)


Interest income


574



2,292



2,684



7,187


Income (loss) from continuing operations before taxes


7,597



155,282



(445,490)



415,946











Income tax (expense) benefit


(3,112)



(22,206)



177,347



(83,280)


Net income (loss) from continuing operations


4,485



133,076



(268,143)



332,666


Net income (loss) from discontinued operations


7,061



35,343



(90,916)



88,263


Net income (loss)


11,546



168,419



(359,059)



420,929











Less: Net income attributable to noncontrolling interests ($0, $930, $870
and $1,815 related to discontinued operations)


(1,507)



(46,659)



(31,666)



(68,405)


Net income (loss) attributable to CB&I


$

10,039



$

121,760



$

(390,725)



$

352,524











Net income (loss) attributable to CB&I per share (Basic):









Continuing operations


$

0.03



$

0.86



$

(2.96)



$

2.57


Discontinued operations


0.07



0.34



(0.91)



0.83


Total


$

0.10



$

1.20



$

(3.87)



$

3.40











Net income (loss) attributable to CB&I per share (Diluted):









Continuing operations


$

0.03



$

0.86



$

(2.96)



$

2.54


Discontinued operations


0.07



0.34



(0.91)



0.83


Total


$

0.10



$

1.20



$

(3.87)



$

3.37











Weighted average shares outstanding:









Basic


101,177



101,102



100,834



103,725


Diluted


101,736



101,863



100,834



104,555



 

Chicago Bridge & Iron Company N.V.

Segment Information

(in thousands)














Three Months Ended September 30,


Nine Months Ended September 30,



2017


2016


2017


2016


















NEW AWARDS (1)




% of




% of




% of




% of




Total




Total




Total




Total

Engineering & Construction


$

65,181



15%


$

1,508,301



88%


$

2,787,690



71%


$

2,839,032



78%

Fabrication Services


371,769



85%


215,254



12%


1,121,137



29%


819,962



22%

Total


$

436,950





$

1,723,555





$

3,908,827





$

3,658,994





















REVENUE




% of




% of




% of




% of




Total




Total




Total




Total

Engineering & Construction


$

1,348,033



78%


$

1,670,879



78%


$

3,409,081



73%


$

4,794,000



77%

Fabrication Services


389,731



22%


466,998



22%


1,259,609



27%


1,406,713



23%

Total


$

1,737,764





$

2,137,877





$

4,668,690





$

6,200,713





















OPERATING INCOME
(LOSS) FROM CONTINUING
OPERATIONS




% of
Revenue




% of
Revenue




% of
Revenue




% of
Revenue


Engineering & Construction


$

13,051



1.0%


$

126,824



7.6%


$

(505,855)



(14.8)%


$

323,891



6.8%

Fabrication Services


26,142



6.7%


27,752



5.9%


97,599



7.7%


89,534



6.4%

Total operating groups


39,193



2.3%


154,576



7.2%


(408,256)



(8.7)%


413,425



6.7%

Restructuring related costs


(26,882)









(30,882)








Total


$

12,311



0.7%


$

154,576



7.2%


$

(439,138)



(9.4)%


$

413,425



6.7%


















BACKLOG (1)


September 30, 2017


% of Total


December 31, 2016


% of Total

Engineering & Construction


$

9,190,401



86%


$

9,998,322



85%

Fabrication Services


1,482,218



14%


1,818,963



15%

Total


$

10,672,619







$

11,817,285








(1)

New awards represent the value of new project commitments received by the Company during a given period, as well as scope growth on existing commitments.  Backlog includes the value of new awards until work is performed and revenue is recognized or until cancellation. Backlog may fluctuate with currency movements.

 

Chicago Bridge & Iron Company N.V.

Discontinued Operations Statements of Operations

(in thousands, except per share data)












Three Months Ended September 30,



2017


2016



Capital
Services


Technology


Total


Capital
Services


Technology


Total














Revenue


$



$

170,143



$

170,143



$

530,912



$

183,321



$

714,233


Cost of revenue




103,345



103,345



490,758



113,890



604,648


Gross profit




66,798



66,798



40,154



69,431



109,585


% of Revenue


%


39.3

%


39.3

%


7.6

%


37.9

%


15.3

%














Selling and administrative expense




8,991



8,991



14,312



10,589



24,901


% of Revenue


%


5.3

%


5.3

%


2.7

%


5.8

%


3.5

%














Intangibles amortization




1,520



1,520



4,030



4,518



8,548


Equity earnings




(4,879)



(4,879)





(1,609)



(1,609)


Other operating expense (income), net




8



8



(1,201)





(1,201)


Operating income from discontinued
operations




61,158



61,158



23,013



55,933



78,946


% of Revenue


%


35.9

%


35.9

%


4.3

%


30.5

%


11.1

%














Interest expense




(55,512)



(55,512)



(5,989)



(18,858)



(24,847)


Interest income








302



14



316


Income from discontinued operations
before taxes




5,646



5,646



17,326



37,089



54,415















Income tax benefit (expense)


5,166



(3,751)



1,415



(6,236)



(12,836)



(19,072)


Net income from discontinued operations


5,166



1,895



7,061



11,090



24,253



35,343















Less: Net income from discontinued operations
attributable to noncontrolling interests








(930)





(930)


Net income from discontinued operations
attributable to CB&I


$

5,166



$

1,895



$

7,061



$

10,160



$

24,253



$

34,413




















Nine Months Ended September 30,



2017


2016



Capital
Services


Technology


Total


Capital
Services


Technology


Total














Revenue


$

1,114,655



$

454,840



$

1,569,495



$

1,655,583



$

491,858



$

2,147,441


Cost of revenue


1,047,614



281,870



1,329,484



1,546,823



301,239



1,848,062


Gross profit


67,041



172,970



240,011



108,760



190,619



299,379


% of Revenue


6.0

%


38.0

%


15.3

%


6.6

%


38.8

%


13.9

%














Selling and administrative expense


29,541



27,079



56,620



39,499



33,436



72,935


% of Revenue


2.7

%


6.0

%


3.6

%


2.4

%


6.8

%


3.4

%














Intangibles amortization


2,550



10,503



13,053



12,260



13,545



25,805


Equity earnings




(9,662)



(9,662)





(8,030)



(8,030)


Loss on net assets sold


64,817





64,817








Other operating expense (income), net


504



38



542



(1,505)



4



(1,501)


Operating (loss) income from discontinued
operations


(30,371)



145,012



114,641



58,506



151,664



210,170


% of Revenue


(2.7)

%


31.9

%


7.3

%


3.5

%


30.8

%


9.8

%














Interest expense


(13,440)



(110,579)



(124,019)



(17,699)



(56,039)



(73,738)


Interest income


16





16



916



53



969


(Loss) income from discontinued
operations before taxes


(43,795)



34,433



(9,362)



41,723



95,678



137,401















Income tax expense


(62,392)



(19,162)



(81,554)



(15,915)



(33,223)



(49,138)


Net (loss) income from discontinued
operations


(106,187)



15,271



(90,916)



25,808



62,455



88,263















Less: Net income from discontinued operations
attributable to noncontrolling interests


(870)





(870)



(1,815)





(1,815)


Net (loss) income from discontinued
operations attributable to CB&I


$

(107,057)



$

15,271



$

(91,786)



$

23,993



$

62,455



$

86,448


 

Chicago Bridge & Iron Company N.V.

Condensed Consolidated Balance Sheets

(in thousands)








September 30,


December 31,



2017


2016

ASSETS










Current assets


$

1,816,413



$

1,937,976


Equity investments


66,164



35,541


Property and equipment, net


393,015



434,252


Goodwill and other intangibles, net


2,413,419



2,395,474


Assets of discontinued operations


1,103,888



1,986,480


Other non-current assets


1,284,114



1,049,697


Total assets


$

7,077,013



$

7,839,420







LIABILITIES AND SHAREHOLDERS' EQUITY










Current maturities of long-term debt and other borrowings, net


$

2,079,913



$

911,410


Other current liabilities


2,981,531



3,062,222


Long-term debt, net




1,287,923


Liabilities of discontinued operations


349,340



600,907


Other non-current liabilities


407,383



415,621







Shareholders' equity


1,258,846



1,561,337


Total liabilities and shareholders' equity


$

7,077,013



$

7,839,420




Condensed Consolidated Statements of Cash Flows and Other Financial Data

(in thousands)






Nine Months



Ended September 30,



2017


2016

CASH FLOWS










Cash flows from operating activities


$

(687,998)



$

495,041


Cash flows from investing activities


747,038



(151,686)


Cash flows from financing activities


(298,735)



(268,422)


Effect of exchange rate changes on cash and cash equivalents


76,408



(10,188)


(Decrease) increase in cash and cash equivalents


(163,287)



64,745


Cash and cash equivalents, beginning of the year


505,156



550,221


Cash and cash equivalents, end of the period


341,869



614,966


Cash and cash equivalents, end of period - discontinued operations




(16,412)


Cash and cash equivalents, end of period - continuing operations


$

341,869



$

598,554







OTHER FINANCIAL DATA










(Increase) decrease in receivables, net


$

(197,532)



$

46,418


Change in contracts in progress, net


34,994



(252,857)


Decrease in inventory


65,841



49,473


(Decrease) increase in accounts payable


(48,801)



11,830


Change in contract capital


$

(145,498)



$

(145,136)







Depreciation and amortization


$

65,637



$

93,285


Capital expenditures


$

40,089



$

37,855


 

www.cbi.com (http:// www.cbi.com ). (PRNewsFoto/CB&I)" alt="For more information, visit www.cbi.com (http:// www.cbi.com ). (PRNewsFoto/CB&I)"/>

 

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SOURCE CB&I

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